The Federal Reserve sets US interest rates. ( Reuters: Joshua Roberts )
The US Federal Reserve held interest rates unchanged at its most recent meeting, but in Australia, high inflation data suggests we're likely to hike rates.
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So, the result of the Fed's meeting overnight was expected.
But that doesn't mean interest rates are on hold forever in the world's biggest economy.
The outcome of this week's meeting was widely expected after top Fed officials indicated they saw no rush to raise rates again following the quarter-percentage-point increase approved last month, despite inflation data in the meantime that was stronger than forecast and concerns that price pressures are broadening across the economy.
Energy costs remain high , including for diesel fuel, which is a key input for shipping, agriculture, and other industries. Inflation and the cost of living in general have been central to the political races that will determine whether Trump's Republican Party remains in control of both houses of Congress on November 3, or whether Democrats move into leadership positions and gain more robust oversight powers, including over the Fed.
Financial markets are still pricing in a couple of additional rate hikes in the coming months, though with slightly less conviction than before Fed Chair Kevin Warsh spoke.
Pricing shows about an 80% chance of a rate hike at the Fed's December 8-9 meeting, with another likely by March .
Inflation, which is currently around a percentage point above the Fed's target, has shown little progress in recent months.
The US central bank has missed its inflation target for five and a half years , a fact that has left some officials worried that businesses and households are becoming accustomed to faster price increases and may plan for them in ways that will make inflation harder to control.
The US Federal Reserve held interest rates steady, as expected, opting to delay any changes to borrowing costs until after next week's mid-term elections in the nation and awaiting further data on the path of inflation.
'The Fed' as it is known is the US central bank. Our equivalent is the Reserve Bank, which will make its decision on interest rates on Tuesday.
In a 10-2 decision, the US central bank said it would maintain its benchmark interest rate within the current 3.75%-4.00% range while acknowledging that inflation "remains elevated," upgrading its assessment of the economy, and hinting that further rate hikes may be coming depending on the performance of inflation.
Locally, a 'hot' - higher than expected - result for inflation adds weight to the likelihood of rates increasing on Melbourne Cup Day.
Here's what the rate-setting Federal Open Market Committee said in its latest policy statement:
"The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2% goal... The Committee will deliver price stability."
Fed Chairman Kevin Warsh , speaking in a press conference following the end of the policy meeting, did not offer guidance on the outlook for monetary policy, but acknowledged that the central bank had not achieved price stability.
"We're working on it," he said.Warsh, who took over as head of the central bank in May, added that he does not believe "in prejudging meetings" and noted that "a lot of things can happen, so I'm not going to be able to share with you my musings about what happens when this group gets together six weeks from now."
Fed Governor Lisa Cook , currently being targeted by President Donald Trump for removal from the central bank, cast her first dissent on a central bank policy decision, favouring a quarter-percentage-point rate hike. Cleveland Fed President Beth Hammack , a consistently hawkish voice, also dissented in favour of the same rate increase.
ASX 200 futures: +0.2% to 8,882 points
Australian dollar: 0.5% to 70.57 US cents
Brent crude: -0.1% to $US113.75/barrel
Live updates on the major ASX indices:
Hello, I'm Daniel Ziffer from the ABC business team and I'll be taking you through the morning on our business, finance and economics blog.
Overnight, Wall Street indices were up in tandem.
The blue-chip Dow Jones of 30 mega-companies like Boeing and Visa was +0.3% to 52,510 points.
The broader S & P 500 that covers 500 of the largest listed companies in the US +0.3% to 7,742 points.
The tech-heavy Nasdaq was +0.2% to 26,528 points.
Our market is set to lift a similar level, with the ASX 200 futures index tipping a rise of +0.2% or 22 points to 8,882 points.
There’s lots to get to, all of it news, analysis and information and none of it financial advice.
